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(Update) Prime minister David Cameron today announced that there will be a formal inquiry into banking standards following Barclays’ shocking rate-rigging revelations.

Barclays was fined a record £290 million by UK and US regulators last week after it emerged the bank had manipulated the Libor interbank lending rate during the credit crunch. Other banks, including Lloyds, HSBC and RBS, are thought to also be involved.

The cross-party inquiry, which is to be led by Conservative MP and head of the Treasury Select Committee Andrew Tyrie, will begin ‘immediately’, Cameron said.

The committee will have the power to take evidence under oath from those involved and will have full access to papers, officials and ministers, including those from the present and last government, so it can ‘get to the truth and make sure this never happens again’.

The inquiry comes just weeks after the government published its white paper on banking reforms, following the recommendations put forward by Sir John Vickers in his Independent Commission on Banking (ICB) report.

Cameron said he wanted the inquiry completed before Vickers' bill is introduced in January so that its findings can be put into the bill.

'Let's 'get on with it, find the answers and put it into law', he urged.

Ed Balls, Labour's shadow chancellor, said the government's decision not to go ahead with an independent and judge-led inquiry 'will not do', describing the inquiry as an 'inadequate and weak plan' which has been 'cobbled together'.

Chancellor George Osborne, however, defended the coalition's decision and said he did not think that a long, costly public Leveson-style inquiry was the right answer. 'We know what went wrong,' he said.

Osborne also revealed that there will be an investigation into the regulation and operation of Libor led by Martin Wheatley, head of the new Financial Conduct Authority; a review of the regulator's powers and a change to the Financial Services bill to ensure that the multi-million pound fines paid by British banks and financial firms go to the taxpayer.

Both Bob Diamond and Marcus Agius are due to appear before MPs on the Treasury Select Committee on Wednesday and Thursday this week.

The Serious Fraud Office, meanwhile, said it was working closely with the Financial Services Authority (FSA) and investigating if it is ‘appropriate and possible’ to bring criminal prosecutions against the bank. It hopes to have a decision within the month.

Ed Balls and independent inquiry, like the whitewash inquiries, strictly limited as to what could be looked at? Let us not forget he ignored the advice from BoE on the rapidly swelling bubble and that most of the wrongdoings bein looked at were done on their watch, but unlike Agius, the politicians in charge will not resign and will still hang on get AND be paid and earn pensions, in other words will not fall on their swords, nor will they accept any responsibility for things going on whilst in charge.

They were in charge of the biggest Ponzi scheme and the tax payer will pick up that tab, but none will go to jail.

Just changing the name of the regulator is supposedly going to change the culture. The FSA did very little to protect small depositors and investors while they were left to watch the bankers and quite frankly they did what it said on the label - watch bankers, they did indeed, while the bankers themselves who believe they are a special breed (just like most robber barons), who have special privileges the likes of you and I are denied access to.

It is not just a question of the money involved but that no one seems to think they done wrong - they all sing the same tune, others do it, and are still doing it, so the game goes on. It is all just a game for these special people, who remain protected by our government. What is the point of the Leveson inquiry, costing thousands, probably millions before they sum up?

They are all in it together, corrupt politicians with corrupt bankers, together with equally dodgy media types - they are above the law. Britain can pride itself that the one law for the rich and another for the poor is as lively as ever, thanks to the close relationship between the parties, and party it still on, bring on the champers - it never changes. Bring on the Mayan prediction, hopefully it will get rid of these pollutants, who are allowed to walk the streets when they have been conducting daylight robbery.